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On Tuesday, Citi analyst Lydia Ling updated the financial outlook for Atour Lifestyle Holdings (NASDAQ:ATAT), increasing the price target to $36.50, up from the previous $35.80, while reaffirming a Buy rating on the company’s stock. The company, currently valued at $4.16 billion, has demonstrated remarkable financial strength, earning a "GREAT" overall health score according to InvestingPro analysis. Atour Lifestyle reported a 38% year-over-year revenue increase to Rmb2 billion in the fourth quarter of 2024, surpassing both Citi’s estimates and the Visible Alpha consensus by 11% and 6%, respectively. This performance was largely driven by the company’s retail segment, while its hotel operations met expectations. The company’s impressive growth trajectory is reflected in its trailing twelve-month revenue growth of 76.11%, with strong profitability metrics including a 40.36% gross margin and a 53% return on equity.
The company’s net profit (NP) experienced a significant 50% year-over-year rise to Rmb330 million, again outperforming Citi’s and Visible Alpha’s projections by 4% and 8%, respectively. Despite potential uncertainties surrounding revenue per available room (RevPAR), Citi’s analyst suggests the impact should be minimal. InvestingPro analysis suggests the stock is currently undervalued, with multiple positive indicators including strong cash flows and healthy balance sheet metrics. Subscribers can access 10+ additional ProTips and comprehensive financial analysis in the Pro Research Report. The firm anticipates that Atour’s aggressive hotel expansion strategy and its focus on the sleep-focused retail business will continue to fuel robust growth into 2025.
Management at Atour has provided guidance for a 25% year-over-year revenue increase in 2025, with plans to open approximately 500 new locations. The retail business is expected to grow no less than 35% year-over-year, while maintaining stable net margins. Trading at a P/E ratio of 21.8, the stock appears reasonably valued relative to its growth prospects. In light of these factors, Citi has adjusted its 2025 and 2026 earnings forecasts upward by 3.0% and 3.8%, respectively, due to a more optimistic retail outlook.
Investors interested in learning more about Atour Lifestyle Holdings will have the opportunity to join a group investor call hosted by Citi at 10 am HKT on March 27, for which registration is required. Additionally, Citi will facilitate investor meetings in Hong Kong on April 10, also requiring registration. These events provide a platform for investors to engage directly with Atour’s management and gain deeper insights into the company’s strategy and performance. For comprehensive financial analysis and real-time updates, investors can access detailed metrics and expert insights through InvestingPro’s extensive research platform.
In other recent news, Atour Lifestyle Holdings Ltd reported a significant increase in financial performance for fiscal year 2024, with net revenues rising by 55.3% year-over-year to RMB 7,248 million. The company saw substantial growth in retail revenues, which surged by 126.2% to RMB 2,198 million, alongside hotel revenues that increased by 53.3% to RMB 4,149 million. Despite these gains, the adjusted net profit margin experienced a slight decline of 1.4 percentage points. Atour also expanded its hotel network by opening 471 new hotels, marking a 63% increase from the previous year, with plans to open 500 more in 2025. The company aims for a 25% revenue growth in 2025, focusing on its retail business, which is expected to outpace hotel revenue growth with a target of over 35% growth. CEO Wang Haijun emphasized the company’s strategic focus on expanding its membership ecosystem and retail offerings. Additionally, Atour’s stock experienced a premarket decline, reflecting investor caution despite the company’s strong financial results and growth plans.
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